The size of the increase is likely to add to the Bank’s concerns – flagged up earlier this week – about the precarious financial position of many individuals and led some City analysts to speculate that it would encourage Threadneedle Street to try to rein in consumer borrowing with an increase in interest rates. With the City detecting that the Bank is edging closer to its first increase in borrowing costs since the start of the financial crisis a decade ago, sterling briefly rose above $1.30 on the foreign exchanges to its highest level since the general election three weeks ago.
UK in credit splurge despite pay squeeze, Bank figures show
Britain’s hard-pressed consumers are increasingly turning to credit cards, overdrafts and loans to support their spending, according to the Bank of England. Threadneedle Street’s monthly report on money and credit found that the outstanding amount of unsecured consumer credit rose by 10.3% in the year to May, five times as fast as the growth rate of earnings.
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